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Tax on gift

Arnav Jain (Student) (75 Points)

31 October 2014

I have a querry related to tax implication on gifting a property to daughter in law.

If X gifts a property to Y(Relative) and the property gifted is on mortgage then what will be the tax implication?

If Y pays off the mortgage by giving the amount to X for the purpose then will it be considered as a sale?

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11 Replies

CA Siva Palla (FP&A- Associate Manager) (95 Points)
Replied 31 October 2014

Gifts to relatives are not taxable under any circumstances under the income tax act or any act for that matter( Since gift tax was removed). Even that gifting of cash for repayment of mortgage is not taxable.

If the same transaction is with a person other than a relative (which is not the case with you),then gifted amount in excess of 50,000 is taxable @ 30% flat.

But if any income is derived from that property, it will be clubbed in your hands as it is a transfer for inadequate consideration.

Arnav Jain (Student) (75 Points)
Replied 31 October 2014

@ Siva Palla is Daughter in Law covered under the definition of relative?

And should there be any gift deed to prove the transfer or the deed which shows mortgage has been paid is enough?

CA Siva Palla (FP&A- Associate Manager) (95 Points)
Replied 31 October 2014

Yes daughter in law is well covered as a relative. All linear ascendants or descendants and their spouses are relatives as well.

If you want to transfer the property, there should be a gift deed because your daughter in law will be needing it at the time of selling the same(if she wants to sell so). But as far as Income tax is concerned, you needn't prove anything as to transfer since you are not availing any exemption or deduction on the condition of transfer.

Amit (Accountant) (261 Points)
Replied 31 October 2014

Gift to daughter in law is not taxable. But, any income arising out of the property gifted to daughter in law by father in law is taxable in the hands of the father in law u/s 64.

Amit (Accountant) (261 Points)
Replied 31 October 2014

Gift to daughter in law is not taxable. But, any income arising out of the property gifted to daughter in law by father in law is taxable in the hands of the father in law u/s 64.

Amit (Accountant) (261 Points)
Replied 31 October 2014

Gift to daughter in law is not taxable. But, any income arising out of the property gifted to daughter in law by father in law is taxable in the hands of the father in law u/s 64. Read more at: /forum/tax-on-gift-310181.asp#.VFN_KXLoTHs

Mihir (Wealth Manager) (5293 Points)
Replied 31 October 2014

Prepare a gift deed in favor of the daughter-in-law duly stamped and registered. If the property is mortgaged, and you will pay off the mortgage by giving the amount to daughter-in-law, then that too will have to be documented.

vineethmohanan (.) (36 Points)
Replied 31 October 2014

Relatives of an assesse includes A) spouse of the individual B) brother and sister of individual C) brother or sister of the spouse of the individual D) brother or sister of either of the parent of the individual E) any lineal ascendant or descendant of the individual F) any lineal ascendant or descendant of spouse of the individual G) spouse of the person referred to in clauses(b) to (f) above

Shashank J Poojary (Article) (21 Points)
Replied 01 November 2014

@ Siva Palla , here Arnav Jain had asked a secong question n bringing it to your attention i would like to ask that, if the full mortage amount is paid by Y to X than is it a sale, considering that the consideration paid was adequate.

ALKESH KUKADIYA (ACCOUNTANT) (34 Points)
Replied 02 November 2014

I have the same que as of Mr Shashank. Kindly help us to get it out !!!

CA Siva Palla (FP&A- Associate Manager) (95 Points)
Replied 02 November 2014

If a sale deed is drawn up and amount is received correspondingly, it is a sale consideration. If just the money is given, it is just a gift of money and not sale.